Microsoft is "buying more companies than we have ever bought," according to chief executive Steve Ballmer -- but they are mostly small ones. According to Seattle PI newspaperman Todd Bishop, Microsoft did 23 deals in its last fiscal year, compared with nine the year before. However, the cost was much lower: only $650 million compared with more than $2 billion.

The story says:

The smaller deals often don't contribute significantly to the bottom line in the short run. But in some cases, their effects have been seen relatively quickly in Microsoft products.

Windows Live Writer, a blogging program released in test form last week, started inside Onfolio Inc., acquired by Microsoft in March.

Last month, Microsoft introduced a new project called Photosynth based in part on technology from Seadragon Software, acquired in February.

However, Google is buying even more small companies: "Google Chief Executive Eric Schmidt told reporters at a conference last month that Google buys companies at a rate of one or two a week, many of them as small as one to three people," reports Bishop.